25 November 2013
I have come across a case in which there is sale of tenancy rights and it is acquired in the year 1965. Hence it would attract capital gains. The question is to whether indexation can be availed on the same? will the option of cost or fmv as on 1.4.1981 be available? What if certain amout of the consideration has been used to pay rent by the assessee for residence?
25 November 2013
Yes since it is a capital asset as per definition under sec 2 and if it is held for more then 36 months before transfer then it is a long term capital gain and indexation is allowed.
26 November 2013
with regards to indexation, there is no doubt that indexation shall be available. But the question is on what? In case of tenancy rights, it should be the cost assessee paid to buy the tenancy rights or the cost shall be considered as Zero. FMV on 1 April 1981 shall not apply.
However, if it is a case of leasehold rights in land, benefit of FMV as on 1 April 1981 and the indexation shall be available.
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